Shipyard Hopes To Build Gas Tanker

June 01, 1995|By LISA HUBER Daily Press

NEWPORT NEWS — In the next 2 1/2 years, Newport News Shipbuilding hopes not only to have a design but a contract to build a massive liquefied natural gas tanker.

The yard, as part of a partnership with a Japanese builder and a Houston shipper, got a boost toward that goal Wednesday when it won a roughly $3.9 million Defense Department grant to design "the LNG of the future."

Company executives long have said they must pursue commercial deals to compensate for defense cutbacks that have translated into fewer contracts for its flagship products, Navy aircraft carriers and submarines.

The grant is similar to one the yard received last year toward design work on its Double Eagle double-hull tanker. Since then the yard has signed three pacts to build up to 20 of the ships for between $38 million and $52 million each.

An LNG tanker is a much larger and more complicated ship because it must carry its cargo at very low temperatures - minus 260 degrees Fahrenheit.

As a result, industry analysts have estimated each LNG would carry a price tag of between $280 million and $300 million.

That's still little more than a drop in the bucket in the context of the $5.3 billion of mostly Navy work that the yard has yet to complete.

Industry analysts have suggested that future LNGs will be larger than those built when the yard delivered its last tanker to El Paso LNG Co. in 1979. Those ships carried 125,000 cubic meters of liquefied natural gas.

The project is one of many on which the yard has joined forces with Ishikawajima-Harima Heavy Industries of Japan. Two years ago, Newport News licensed an LNG design from the company and jointly sought contracts to build up to eight of the vessels. The yards didn't win that deal.

The other partner in the project to design the ship - Exxon Corp. subsidiary SeaRiver Maritime Inc. - is a potential customer for the ship.

The whole project is valued at about $7.85 million, with the federal government putting up half and the three companies coming up with the rest.

The grant comes just one week after the yard announced it withdrew a bid to build up to three massive shuttle tankers for a Canadian shipping consortium. At the time, the yard said it would be unable to build the ships by 1997, partly because it will expand its largest dry dock during that time.

"One of the reasons we're expanding that dry dock is to build LNGs," Dickseski said.

Last week the yard laid off 138 employees in the pipefitting and machinery installing departments. Another 1,400 of the yard's most experienced blue-collar workers had until midnight Wednesday to accept the yard's early retirement buyout.